Which of the Following Is Most Likely to Be a Variable

question 177

Multiple Choice

Which of the following is most likely to be a variable cost for a manufacturer of amusement park rides?

• A) annual lease of a tractor-trailer used to deliver rides to buyers
• B) executive salaries
• C) warehouse rent to store semi-finished and finished rides
• D) workers' insurance
• E) steel,lumber,and aluminum used in construction of rides

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Definitions:

Average Fixed Cost

The fixed costs of production (e.g., rent, salaries) divided by the quantity of output produced; these costs decline as production increases.

Average Variable Cost

Total variable costs divided by the quantity of output, showing the variable cost per unit of output.

Marginal Cost

The price to produce an additional unit of a product or service.

Total Costs

The total expense of manufacturing that encompasses all constant and fluctuating costs.